It is a service that has been proven to assist in bills payment, airtime purchase, funds deposit and withdrawal, and importantly money transfers especially between remote locations. Mobile money – a service expected to bring the unbanked populace into the realm of financial inclusion, and to give the already banked a quicker way of transacting ‘small’ deals with their cell phones – is officially just over a year old in Nigeria, going by the cashless (or cashlite) regime championed by the Central Bank of Nigeria. The CBN, who has adopted the bank-led model of mobile money system for the country, had earlier licensed 11 firms to offer the service to Nigerians; 75% of whom have been severely abandoned by the banks due to low earning and/or distance to ‘civilization’. All these were to the exclusion of the telecom operators who were willing to participate, but only expected to be enablers in the industry.

The slow growth of the service in Nigeria, in the opinion of many concerned citizens, has to do with the model chosen by the apex bank. Contrasting this with the global runaway success story when it comes to mobile money, Kenya; the development of the service was telco-led riding on their huge subscriber base, many of whom were unbanked. Safaricom of Kenya ventured into the world of unknown in 2007 with its M-PESA (M is for mobile, and PESA is money in Swahili), and within a year could boast of 1 million subscribers on the service. Five years later, over a third of the country’s population are using the service. The mobile transfer funds in the country within the first nine months of this year alone was very close to the national budget value, $17.5bn. M-PESA of course made Safaricom lots of money – over 12% of its total revenue in 2011, and in 2012 it made about Shs16.9bn (about $196m), 16% of the total revenue coming from the mobile money service (Check Safaricom’s full 2012 Annual Report here). But, was it about money in the beginning? Was it even designed ‘for’ business at all? Was the Central Bank of Kenya (CBK) sleeping when the service was being piloted? That’s really where both the telcos in Nigeria and the CBN got it wrong……it was never about the money in the beginning, and the CBK was well aware of the scheme development; yet guided the venture to fruition. It was people first, need met, period.

The telecom operators in Nigeria lost the chance despite being given a clear business case from the beginning. Many would remember the boom period of mobile telephone kiosks and tables when call tariffs were still a bit high; it was customary then to send recharge card pins across states to your friends and relatives with the kiosk operators buying such pins at discount. You were transferring money and paying for services, but the telcos missed the cue. They thought people were sending recharge cards pins for their friends to top up, so they rolled out versions of Me2U products where you could send credit to your friends’ phones without scratching. But people actually wanted physical cash! If they had really noticed, and really wanted, they could have made a case to the then CBN governor who might have been more accepting.

Another reason was that, perhaps the telcos noticed the need for the service, but were too concerned about the business side of the venture and its viability – not much was known about Safaricom’s success until 2010, so no previous benchmark for them anyway. The Kenyan operator initially designed the scheme as a microfinance project tailored to assist people (especially those in the rural areas) have easy access to funds, and not as a ‘business’. The company was actually trying to fill a ‘big’ social need, but the scheme evolved into the massive M-PESA on the Kenyan streets. Nigeria telcos were (and still are, going by their hurt after the CBN preclusion) seeing the service as another possible VAS (Value Added Service) business where they can rake in cool billions. The banks and other licensed firms might also be suffering from the same malady now. They should all realize that focusing on the business unit’s bottom-line ab-initio would never work. There is that need to empathize with the unbanked first, and be really seen to empathize.

The last point may not directly be attributable to the telcos, and that’s financial regulation. It’s true that we are actually talking about people’s money, but we are also concerned about efforts to bring about 75% of bankable population into the formal financial stream. Hence, there’s a real need to allow innovation to fester first before regulation. This was the position of the CBK, and the country is now better for it. With about 14.91 million people on M-PESA, as at March 2012, imagine the financial buzz. And mind you, M-PESA (and other mobile money offerings in the country) are now tightly tied and integrated with the banks. But first things first!

The CBN’s concern of not wanting to put two important sectors of the economy into the hands of a few companies sound very risk averse and being ready to abdicate the responsibility of checking and monitoring, like CBK did. With the current huge number of mobile subscribers in the country, infrastructure, and the ready made fleet of agents (recharge cards sub-dealers and retailers); the telcos are well, and better, suited to champion this service. With the bank-led model, we might have put the cart before the horse.